US wealth management firm First Republic Bank’s attempts to assuage fears over its exposure to Silicon Valley Bank have failed to stem significant losses to its share price this morning.
In a statement, First Republic said it has “further enhanced and diversified its financial position” with access to additional liquidity from the Federal Reserve Bank and JPMorgan Chase & Co (NYSE:JPM).
The additional funding was reported to increase the firm’s unused liquidity to US$70bn.
Despite reassurances, shares were seen 60% down to US$81.76 in pre-market trades as of 11.30am.
“It’s down to a sharp loss of shareholder confidence,” says Susannah Streeter at Hargreaves Lansdown to Reuters, adding: “The banks aren’t being bailed out, but depositors are, and worries about the viability of First Republic are growing... It’s highly likely that there has been a rush of more depositors withdrawing money.”
Regional Arizona bank Western Alliance Bancorporation is also under pressure, having dipped over 48% in pre-market trades.
Smaller and more regional banks are facing the prospect of mass withdrawals due to depositors rushing towards larger, perceptively safer financial institutions.